The High Cost Of Not Developing Your People

The High Cost Of Not Developing Your People

US companies spent more than $70 billion [internationally, $130 billion was spent] last year on learning and development. Unfortunately still, the majority of training that takes place is mandated at a specific time, in a stuffy conference room or via the intranet with a boring and ill-prepared instructor/speaker stumbling through poorly designed and miserably tedious PowerPoint slides. Even with the amount of money spent in the US on learning and development, the average employee only has approximately 1% of their week to dedicate to their learning & development. Taking a deeper look into training among various size organizations, the team at Shift Disruptive E-Learning found that organization’s with fewer than 100 employees provide an average of 12 minutes [12 minutes…oy vey!!] of training every six months. Here are some other compelling [and super scary] statistics about the importance today’s organizations place on L&D:

  • Companies with 100-500 employees provide an even smaller quantity of training – six minutes every six months
  • 74% of employees don’t feel they are reaching their full potential at work
  • Only 12% of learners apply the mandated training to their jobs
  • 62% of managers do not believe they are meeting their learners needs through training deemed important by organizations
  • The total loss to business from ineffective training is an astounding $13.5 million per 1000 employees per year

The other day, I wrote about the need to create an ecosystem of learning. A learning ecosystem is one that delivers content and learning that is a relevant, relatable, and accessible part of each persons work day. In that article I referred to the 70:20:10 framework that generally defines the effective ways of learning for people. This framework has illuminated the serious limitations that exist in formal learning and how impotent in the overall strategy any formal/classroom style training is. In addition to the general lack of relevance, enthusiasm, and engaging material most organizations force-feed their employees, they deliver it in such a way that almost repels retention.

Research on the “forgetting curve” shows that within one hour of formal learning, people will have forgotten an average of 50% of the information presented. Within 24 hours, they have forgotten an average of 70% of new information, and within a week, forgetting claims an average of 90% of it. The fact that we spend $70 billion in training and 90% of it is forgotten is tantamount to filling a gas tank with a large hole in it. It is wasted money, resources, and time and the fact that your people aren’t learning anything with you can inspire them to seek greener pastures where they feel they can learn and where their minds, efforts, and abilities will be more appreciated.

Why Is Learning & Development Important?

  • 35% of millennials cite comprehensive training and development as a top benefit they seek in a company;
  • Employees who feel they aren’t able to develop in their current company and fulfill their career aspirations are 12x more likely to leave the company;
  • Companies that invest even $1500 in learning & development can see an average of 24% more profit than companies who invest less [Source: HR Magazine];
  • A 10% increase in development produced a 8.6% gain in productivity [Source: Educational Quality of the Workforce];
  • Companies that place a priority on employee development make median revenue of $169,100 per employee while companies that don’t make $82,800, which is less than half;
  • Rehiring costs represent around 12% of a company’s expenses with up to 40% for businesses that have a high turnover rate;
  • A study of 2500 businesses done by the Association of Talent Development, found that companies that offer thorough training had more than twice the amount of income per employee over firms that offered less training. They also create a 6% higher return for shareholders when training per employee is increased by $680.

There is a psychological theory called the Self-Determination Theory that means that we – as individuals – are concerned with supporting our natural [intrinsic] tendencies to behave in effective and healthy ways. This theory – as it relates to L&D – suggests that people are motivated by three things: autonomy, relatedness, and competence. This theory demonstrates that training should provide employees with ownership over their work, collaboration and a community of learning along with fellow employees, and easy accessibility to the information needed in order to apply it on the job, quickly.

One of the most difficult things for companies and executives to understand when we discuss L&D strategies is that we have to teach people more than the tidbits of information that will help them sell and promote the goods or services of your company. We have to care about their long term conveyable marketability. Especially with some industries in distress. We have to authentically care and invest in their overall development – making them better leaders, smarter leaders, and authentic leaders by instilling integrity, and setting them up for success today and into the future. This type of commitment means focusing on technical teaching as well as soft-skills development.

The Benefits Of A Current, Effective Learning Program

  • It Attracts & Retains Great Talent: Employee retention is a gigantic challenge [and tremendous expense] for employers today. The hiring process is time consuming – made only more so by how profoundly broken it is in most companies.. Having a solid employee development program can help make that less of a financial and temporal burden. When it comes to attracting and being desirable to the best talent in the market, here is how a strong L&D Program works in a company’s favor:
    • It is a “perk”: Employee development can be seen as a benefit, and that is something employees weigh in the “pro” column for most when finding a job. Hourly employees, especially, don’t always receive the benefits that salaried workers in larger companies generally get. Providing employee development as part of the hiring | employment package gives you a competitive advantage over other similar jobs and wages and can build your future leadership talent pipeline.
    • It boosts loyalty: Loyal employees aren’t as inclined to jump ship when times are tough or you experience a challenge. Knowing that an employer is making the investment to provide training and development makes an employee feel important and it helps build trust and loyalty. When your employees enjoy working somewhere they will become your best and loudest advocates. Great talent wants to work with great talent, they will help source your external hires because they care about the organization.
    • It escalates your brand position [from an employer perspective]: Having a reputation as a GREAT employer – one who cares enough to provide training – is great both for hiring new employees as well as how customers experience your brand. Word gets out about who is good to work for, and that can help [or hinder] sales as well being desirable to candidates and customers in the marketplace.
    • It shows your company values integrity: By delivering and placing value around training, career path planning, and marketability with the understanding that you expect them to participate in the success of the business, you will attract employees who are sincerely interested in giving themselves their most advantageous opportunities for a great career journey.

Half of organizations say their leaders are not skilled to effectively lead their organizations today, and a startling 71% said their leaders are not ready to lead their organizations into the future. [Source: Brandon Hall Group’s State of Leadership Development Study April 2015]

  • It Helps Design and Discover Promotable Employees: Promoting leaders and other mid- and senior-level employees from within is always a good idea. After all, who else is more familiar with the day-to-day business and with your customer experience position? But longevity should never [ever] be a measure of promotability. Creating a culture around that farrago of counter-productive nonsense is a recipe for disaster, but yet some industries and companies use this as their primary strategy.  An effective employee development program will not only create added value around the employer/employee partnership, it will:
    • Create a pool of capable, appreciated, and engaged employees;
    • Create leadership that is ready for promotion;
    • Help you identify strengths and weaknesses in your employees and can help identify development direction to close the skills gap.
  • It Supports A Healthy Organizational Culture: Employee development is a continuous investment and proposition for a company and the employees. That means that you always have the future in mind. Smart leaders and organizations that are committed to driving sustainability ask the following questions:
    • What kind of leadership will we need?
    • What leadership do we need today?
    • What sort of leadership does the customer experience require?
    • What do we need to deliver to our people to keep them evolving with the industry?
    • What does our top talent want from us to keep them interested, engaged, and enchanted with our brand?

    Since people are essential to the long term success and sustainability of the organization, it behooves your company to ask these questions of your best employees and find out what they need to feel confident, knowledgeable, and productive in their roles. They will absolutely want [and deserve] to have a say in what they learn and how they learn it.

    These are the things that compel agile companies to think ahead, because employee development programs don’t happen without planning and they can change at a moments notice. Your business culture can possibly be shifting daily according any number of realities: The introduction of AI or other omnichannel platforms/initiatives, the customer experience evolution, and even competitive advantages. You might need to attract a different kind of employee or a variety of skill sets and your development offerings need to shift to reflect that. Through Learning & Development you can keep pace with today’s business needs as well as be prepared for the future.

     

About

Founder and Editor in Chief of Excellence In Retail and 18 year retailer. I am a passionate and creative leader and coach committed to inspiring thought, action, truth-telling, solution-seeking, and dialog about how to maximize talent through identifying and creating a process around critical success factors, workplace culture, signature leadership practices, productivity, profitability, alignment of employees and company vision & values, and workplace happiness inside all retail organizations. I help create healthy, vibrant, high-performing, and highly-productive organizations that are talent magnets and focused on delivering the highest level of customer experience that will differentiate them from competition and result in long-term growth and sustainability.

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